EconPapers    
Economics at your fingertips  
 

The Effects of Entry on Incumbent Innovation and Productivity

Richard Blundell (), Rachel Griffith, Peter Howitt (), Prantl Susanne and Philippe Aghion

Scholarly Articles from Harvard University Department of Economics

Abstract: How does firm entry affect innovation incentives in incumbent firms? Microdata suggest that there is heterogeneity across industries. Specifically, incumbent productivity growth and patenting is positively correlated with lagged greenfield foreign firm entry in technologically advanced industries, but not in laggard industries. In this paper we provide evidence that these correlations arise from a causal effect predicted by Schumpeterian growth theory—the threat of technologically advanced entry spurs innovation incentives in sectors close to the technology frontier, where successful innovation allows incumbents to survive the threat, but discourages innovation in laggard sectors, where the threat reduces incumbents' expected rents from innovating. We find that the empirical patterns hold using rich micro panel data for the United Kingdom. We control for the endogeneity of entry by exploiting major European and U.K. policy reforms, and allow for endogeneity of additional factors. We complement the analysis for foreign entry with evidence for domestic entry and entry through imports.

Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (449)

Published in Review of Economics and Statistics

Downloads: (external link)
http://dash.harvard.edu/bitstream/handle/1/4554222/aghion_incumbent.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
Journal Article: The Effects of Entry on Incumbent Innovation and Productivity (2009) Downloads
Working Paper: The Effects of Entry on Incumbent Innovation and Productivity (2006) Downloads
Working Paper: The effects of entry on incumbent innovation and productivity (2006) Downloads
Working Paper: The Effects of Entry on Incumbent Innovation and Productivity (2005) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hrv:faseco:4554222

Access Statistics for this paper

More papers in Scholarly Articles from Harvard University Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Office for Scholarly Communication ().

 
Page updated 2024-07-16
Handle: RePEc:hrv:faseco:4554222